Why did Mircosoft insist on an inefficient interface meant for hand held devices to be implemented on the devices which we still use for work is rather amusing.

The biggest enemy to touch screen is blocking the screen with your touch and the lack of precision that can be offered by a mouse pointer. The lack of efficiency is also a problem, compare the amount of movement required for a mouse to hand movement across a screen.

Touch screen is good for kids and frivolous use and when the screen is smaller than a mouse itself, they need to know which market they cater towards and leave it to the younger generations who grew up with touch screens to solve the dilemma on how to increase its efficiency on a workstation.

I am quite tired of arguments that Microsoft is going to fail.
If we recall correctly, Microsoft has only lost money overall ONCE in it's history since joining the stock market in 1986.
It is more diverse than Apple (smartphones and a little bit of Mac) or Google (advertising/android).
It invests more on research than both of those companies COMBINED. It is really the only company to offer a fully integrated system across all of it's products and it is adapting quickly to the competition.
Putting in the start button again doesn't mean it's failed, it is merely acknowledging the fact that commercial users really prefer the start button. We might also note, the re-installation of the start button removes probably the largest impediment to other users joining.

MS invests heaps in R&D... and gets Windows 8 in return. They make almost no return on their investments.

MS' most profitable operating system is... wait for it... Android. They extort that money from Android OEMs who see it as cheaper than defending themselves against the fundamentally broken patent and litigation systems in the US.

Their monopoly inertia is the only reason they're still in the black - they're stagnant and the picture internally is justifyably bleak.

MS invests heaps in R&D... and gets Windows 8 in return. They make almost no return on their investments.

MS' most profitable operating system is... wait for it... Android. They extort that money from Android OEMs who see it as cheaper than defending themselves against the fundamentally broken patent and litigation systems in the US.

Their monopoly inertia is the only reason they're still in the black - they're stagnant and the picture internally is justifyably bleak.

Microsoft's four most profitable division are (most recent quarter to March 31st 2013):
Windows Division- $3.459 billion
Servers and Tools- $1.979 billion
Microsoft Business Division- $4.104 billion
Corporate Level Activity (basically everything else)- $2.01 billion
From this we can see that Microsoft makes a large amount of money off things things that aren't related to Android (aka Office and Windows).

Perhaps more importantly though is that Microsoft is making money off of Android products (some suggest more than Google). If they are willing to enter into a patent licence agreement and not willing to challenge this in court, then Microsoft has fully earned the money.
As always, the cunning remain at the top.

I probably couldn't disagree with you more, Turtlesmeh. MS' profitability is pure inertia - corporate refresh cycles, etc. Their new OS is actively being backgraded by everyone and her dog. Their "research projects" are almost entirely failures. Their portable devices? No ops. As for Android - the patent system is ripe for exploitation, and MS' crack legal team are taking every advantage of it by extorting royalties from Android OEMs. For the OEMs, it's risk mitigation in case their products don't succeed (given that they're paying per-device sold). But it's a risk they shouldn't have to take - the vast majority of MS' patents should never have been granted (and that's true of software patents in general).

"Corporate refresh cycles" - yes you've hit it on the nose, the lifeblood of software and tech companies.
Please refer to every iteration of the iphone/ipad/ipod, continuous updates to Google's offerings, the same can be said of Samsung, Sony, Nokia, IBM, Oracle and any other company you choose to name in this sector.
Microsoft was late to the portable devices game, we all know that. But the fate of it's offerings there have yet to be decided.
As for the software patents thing, I agree that the current system doesn't work well for the industry.
But that's not Microsoft's problem. Players play to the rules of the game, Microsoft just seems to play better than the rest.

As to the research thing, you do not seem to understand the nature of Microsoft. Their improvements are not big flashy gizmos like Google Glass or Apple iPhones. The main portion of research goes to making sure everything works together across their entire ecosystem. As much as would would like to trump the "Microsoft doesn't innovate" trumpet, the fact is that much of Microsoft's inventions and innovations are deep down in places you are never going to see it anyway (e.d the code).

None of this matters anyway. Microsoft is stilling earning billions upon billions

For Microsoft to implode, they do not have to stop profiting. In the Tech market, where the network effect rules all, success and failure is a matter of inflection points. Microsoft simply have to be seen as having "jumped the shark" to be written off as being in inexorable decline.
Understandably, no one wants to find their wagon hitched to a supplier who is augering into the ground, and MS' loss of influence, leadership, and respect (and fear) in the market place creates a vicious circle which can remarkably quickly lead to their collapse.
I (and many others who have watched them over the past few decades) can see that their cycle of influence is drawing to a close, as inevitably happens with all overly large, monopolistic dynastic corporations. I consider Microsoft to be a morally and ethically risable entity, and wish them all speed towards their demise.

Companies don't die when they become irrelevant.
They die when they become bankrupt.
In order for them to go bankrupt, people have to stop buying their products.
Our experience over the past decades is that this hasn't happened. Whether Microsoft fails in the future is up to the consumer.

It'd be fair to say that only a fool trusts any corporation, given their incentives. That said, the old "but everyone else does it too" saw is lame. MS have been especially flagrant in their corrupt and predatory behaviour over the years (the term "FUD" was coined to describe their behaviour). The only tool we as individuals have to punish corporations (given that governments seem loath to do anyting) is to avoid giving them our money. I've never provided MS or Apple (or Google) with any money (and I've also never infringed any licenses - I use Free and Open Source Software exclusively).

I'm not so worried that they continue to exist and even make money. What I'm worried about is that I can't currently run a business or service customers without *having* to pay MS and deal with their proprietary formats, protocols and broken products. IBM's no longer the market bully that they used to be. They've shifted focus almost completely to services. As soon as MS cease to have the influence they previously had (for example, exclusive pre-install contracts with OEMs) I'll cease to care if they're alive or not.

I have seen nothing worthwhile out of Microsoft since XP64, and I'd love to dump that but have too much time invested and too much software.

Microsoft is a torturer, not a software company. Everything they've ever sold that was any good, they bought from someone else then mucked up. Now I'm supposed to be poking at my $1000 monitor so I can learn to use their obnoxious phone? Ha!

Don't use Windows Media Player, use Winamp.
Don't touch their vile browser, use Firefox.
Dump Office for Sun Open Office.
Get away from Outlook and use Thunderbird.
Skip their bs, "security updates" as too troublesome.

"PC users, in particular, have faced a steep learning curve with the software," according to Tami Reller, head of marketing."Nothing wrong with us, it´s the customer." is arrogant and unprofessional. The OS would be quite good, but only without major inconveniences, which experienced users now bypass with third party software and these changes should be immediately incorporated to OS to serve the wider clientele. Trying to introduce touch features to clients, who only see them slowing down normal working procedures is such a capital mistake, that some heads should roll.
News of PC´s prematurely dead are greatly exaggerated, because it is the platform for serious pros making their living not just toying with the latest hypes.

I switched to Win 8 when it became available as a low cost ($15) upgrade to a machine originally equipped with Win 7. There was a few weeks of getting comfortable but, in the end Win 8 is a big improvement over Win 7. Best OS upgrade since I have been a PC user (~30 years).

Microsoft's problems? I would say that making an after-tax profit of $17 billion ($22 gross) on revenues of $74 billion is a problem that most firms would like to have in this economy.

Most people think Windows is Microsoft's biggest hit, yet the 90% share of the O/S market does not represent the bulk of Microsoft's sales. Windows & Windows Live Division accounted for less than a third of sales in 2012 (~$18.8 billion), with Microsoft Business Solutions (~$24 billion) and Server and Tools (~$18.7 billion) generating significantly more sales. For comparison, The Entertainment and Devices Division (Xbox) generates about half the sales of Windows & Windows live ($9.5 billion).

So there's plenty of diversification to ensure that Microsoft is not just Windows and besides which, haven't we all been complaining about Windows since the day it was released?

Microsoft might have problems if somebody other than Apple develops and markets an O/S to give them some real competition. Apple's threat is mitigated by the premium they charge and things like Android or any other new player face the considerable challenge of scaling up what may be impressive functions on a smart phone to impressive functions on a dedicated PC. Even if Android was equi-capable to Windows at the extremes of performance, Google would still have to muscle in on the long-term cooperation Microsoft has with the semi-conductor firms and PC manufacturers. Even if Android did all this it would then have to entice enough ordinary punters to leave behind the start button, MS Office and Windows for their new O/S.

So Microsoft has $billions in the bank (inefficient and undesirable but never mind), will make $billions more this year and in years to come, has no real competition in the PC O/S market, is a leading business services provider and produces the fastest selling games console on the market. Opportunities for growth via applied sciences is only just beginning (e.g. kinnect, smart glass) and the best-selling Xbox360 is due for an upgrade soon.

I don't want to be too harsh but it seems TE is predicting the downfall of a giant based on a software glitch. At least Microsoft are trying to be innovators with Windows 8, smart glass and semi-innovative with user interface devices. Maybe we shouldn't be so critical of Microsoft trying to be better and failing - there's always an upgrade or patch - when Apple and many other contemporary powerhouses seem to be content with sitting on huge piles of cash, being "risk-off" and milking consumers without ever trying to give us something new.

I suppose that MS was very concerned with the lackluster sales of Windows phones.
Then came Steve Jobs' "POST PC" hyperbole. Obviously MS panicked! Then came up with an idea to enforce PC users with Windows phone interface, to force acceptance of Wndows phones. MS has been using Windows monopoly power to leverage phone and tablet business. This is something you should report to law enforcement agencies!

I'm sad to say this another example of The Economist getting out of its depth with regards to the technology market. Not that blame can be laid too hard, the consumer technology market has long been perhaps the fastest moving, most dynamic market there is, with winners and losers changing every few years if not faster.
But while Microsoft may see a slip in sales and their current products now, they're well prepared for it. Microsoft is nothing if not adaptable, their entire corporate culture is centered around battling out decisions and being able to change what they're doing if something isn't working.
One can take examples of their entertainment division, which started in from a handful of games into large bets such as the original Xbox, which was a big money loser. But they didn't cut their commitment, didn't let it phase them. They adapted to what they learned, and the entertainment division has become on of their most profitable after the massive success of the Xbox 360.
Just like they're finally beginning to see a profit with online services, after years of losing money, they'll adapt Windows 8 and windows in general towards a winning strategy over time, no matter the seemingly entrenched positions of the current big names. After all, that's how Microsoft got started in the first place, battling against IBM and the other big, seemingly impossible to overcome personal PC names of the day.
The one thing that is troubling, however, is the phone front. While they're amenable to change on larger form factors, already acknowledging mistakes and changes with Windows 8 and tablet form factors, they've not managed to do so with their phones. Windows Phone 8 already made a mistake by not coming to Windows Phone 7 users, losing MS their initial small, but happy modern smartphone user base. And the platform continues to see strict, slowly updated technical specifications, restricting what chips can be put in, what screen resolutions can be used. A huge mistake in the still spec driven competition of modern high end smartphones, leaving Nokia and their Lumia lines with lower resolution screens and older dual core specs even while the Android scene races ahead to 1080p screens and more modern quad core CPUs in each phone manufacturer's bid to outdo each other. As is joked in the cutting edge gadget world "I've heard that Windows Phones are very nice, but only Microsoft employees use them."
Still, I can foresee Microsoft staying competitive in the still relevant world of latpops and desktops, a hundred million copies of Windows 8 there is nothing to sneer at. As well as gaining traction in the tablet market. Their Surface Pro tablets are nothing short of an entirely new category of tablets, and Microsoft is the only company with either hardware or software support for such. It's their phone strategy that continues to stumble.

Microsoft should learn lessons from IBM. How IBM survived mainframe downturns. PC has important roles to play. Obviously there are huge PC markets that Microsoft can bank on. Instead of making Windows tablet OS, Windows should take care the needs of traditional professional use of PCs: developing software, creating contents, servers, running business productivity packages such as spreadsheets, word processing, simulation modeling, etc. Professional people will still need traditional PC-OS!

Windows 8 users aren't the only ones tearing out their hair. I just bought an Asus/Google Nexus 7, which turns out to be a glorified media player rather than a tablet computer. I wouldn't have believed it a month ago, but it has me seriously thinking about moving to a Surface, though of course I'll wait until the revisions to Windows 8 are out.

I had expected a device that would support more than personal entertainment.

If your life is all about watching movies, listening to music, & reading recreational literature, and you're happy to get all your content from online sources, then you'll definitely want to consider this tablet: it has a nice form factor, a nice screen, is plenty quick enough, and is reasonably inexpensive. And you can tweet and find the closest Starbuck's or Costa's on it to boot, though given the form factor you will of course have to hunt and peck. Its major limitation is the rather scanty 32GB of internal storage, not much even by media player standards (more on that below).

If, on the other hand, you have actual work to do, and want to use this device as a tablet computer, you'll probably be unhappy with it. The big problems are the 32GB internal storage, lack of an SD card slot and the exclusive use of the MTP/PTP protocols for USB access to that internal storage, with consequently severe constraints on the ability to synchronize your own files to/from this tablet to any other machine. There are partial solutions to the problem (e.g. Nexus Media Importer, Dropbox, Stickmount, Samba, MTP mounting and a few MTP synch utilities, etc.), but many of them are tediously interactive (i.e. resistant to programming/scripting), none of them are completely satisfactory, and the less inadequate ones will all require rooting the device.

I'm using Samba & Stickmount and thanks to FunkyFresh and Chainfire can probably live with it for a while, but as said, my encounter with the Asus/Google Nexus 7 has started me wondering about getting a Microsoft Surface or some other more versatile device. In the meantime, I don't foresee decomissioning my Vaio anytime soon.

Paid $500 for top of the line Nexus and it still requires me to add "Apps" to use for simple word processing and file management. All for clumsy, slow typing and other functions. And you can't directly plug in memory sticks (with presentations) or connect to a projector without more "Apps" and adapters.

Paid $350 last year for Samsung laptop with much faster functioning, regular keyboard and Office 2010 included in price plus 3 USB ports.

Using the tablet as a sales brochure, real work needs a PC - a Windows PC. If we need new ones it'll be W7, not 8.

I'm already in old age, I was very happy when I started to learn to use the computer, it was not difficult to start with Windows XP until Windows 7, everything was wonderful. Today my PC "s old no longer serve. Dai had to choose again with Windows 8 for me was terrible. Want Imagine someone with slightly trembling hands could use Photoshop, with the touch sensitive. It should be very easy for a child or young person. still ........
I'm still looking for the start button, do not know where he hid.
So, since I resign myself, this machine was not made for me but for my grandson. sorry my english

The author states that Apple, in contrast to Microsoft, has kept it mobile and desktop platforms separate. However, a strong case to the contrary may be made, since it is OS X which underpins both Mac OS and iOS. They share an IDE (Xcode), a common programming language (Objective C), and many common APIs (like Core Image). For consumers, jumping between Apple devices is also familiar and well integrated.

Put another way, Microsoft may call their phone and desktop operating systems "Windows 8" but I wonder how similar they are under the hood. Apple may call their offerings MacOS and iOS, but under the hood they are both OS X.

It was idiotic for MS assume that professional users were going use the same interface on PCs as on a tablet/phone. It completely ignores the ergonomics of how different professionals work. It is like saying the dashboard of a Mini and a 747 should somehow be the same or the medicine cabinet in my flat is the same as an operating theater at John Hopkins.

There are more things in heaven and earth, Horatio [Steve Ballmer], than are dreamt of in your philosophy.

Does anyone really do serious work on a touchscreen ? I seem perfectly fine with all the work I need to do using XP , I am not sure what all the fuss is all about. How many times was the biro invented ? Almost all the work I do involves word processing so I am not sure why I need something new. Could someone please explain this to an old foggy dummy like me ? Thank-you.

PCs and non-PCs are 2 different beasts. Windows 8 may go well with portable, touch screen driven hardware, because touching is easier than typing, and its users are not programming, using Photoshop or writing articles on 30 inch screens. Windows 8 presentation (how it appears) is the problem for desktop users. It's not difficult to include a 'Classic Windows' option in Win8. I installed a trial version of Win8 and was not convinced. This may change if I can use it with the similar interface of Windows 7 - without using and external application.
But, as Schumpeter says, this is a minor problem Microsoft faces. Most people just want to navigate the web, tweet, send/receive email, and social-network. They don't need PCs for that.

Windows 8 is not a disaster at all, unless you have limited 2013 machine skills. In fact Win8 melds nicely with my RT surface and apps on my windows phone. That said there are some deficiencies, those they occur in any major SW releases.
Is Schumpeter shooting from the sidelines or actually in there as a Win8 user? In any case your skills as scribe need sharpening in this area methinks.

A phone is a networking and entertainment device, for consumption not creation.
For serious work nothing beats a desktop and Windows 8 was absolutely useless for my purposes. I ended up re-installing 7.

I work on spreadsheets of 50k+ rows and 100+ columns on which I do all sorts of pivots and math transforms. Along with that I'm running a database front end (DB Artisan), Bloomberg, and Eclipse. I also need to concurrently run multiple XWindows sessions on UNIX/Linux machines around the world. For this I have an array of six flat screen monitors on my desk.

The question is why I would want to share this massive presentation surface with my phone? Therefore, in logical reverse, why would I want a phone interface running this desktop?

I understand your point in the casual Twitter, Facebook, Instagram world but not for high end professional workstation use.

The real monkey in the room and the billion dollar question is not weather Windows 8 is a winner or not, but rather weather Mr. Ballmer is a winner or not.

In the last ten years, the most innovative and the only industry leading product MS has launched was the xbox. With its motion sensors it really was a cut above the other game consoles. In the mobile phone space, MS lead with HTC in introduction of smartphones, but after ten years, it has 2% of the market. In the tablet space, MS just missed the boat, and in application eco systems, while once the ASP .net eco system was the most popular platform for development in terms of number of developers world wide, it has become a platform for archaic applications of the last decade. MS Azure is an also ran to AWS.
Outlook and Hotmail are second to gmail. Skype is a leader, but then one they bought not they built.

MS has been a disaster of second and third best also ran attempts. Don't forget the failures of zune, Windows CE, set top box alliance of MS and the cable companies in the TV space, and so on and so on and so on.....

The board of MS needs to look at the leader (Mr. Ballmer) and decide whether they are happy with a second / third best also ran of a company or do they want to be the leader of tomorrow? If they are happy with being the next best, then keep him at the helm, if not, get rid of him, his hard ball politics, his cronies and all that drives the best talent to go somewhere else, and once again make a company that the best and brightest want to land at and work at. Make a company that is the global leader, and not an also follower.

Mr Ballmer can spin it which ever way he wants, but the reality is that since he became CEO, we have seen MS be nothing but second best.

One minor nit with the article: The author states that Win8 was Ballmer's strategy. However, the main motivator for having a unified OS for Phone & Desktop & Server was Steve Sinofsky. It was Sinofsky who was the prime mover of the plan to unify the Windows Phone OS and the core Windows OS. If Microsoft hadn't wasted 3 years aligning phone & desktop, they could have had a touch-based slate device, using the Windows Phone OS as a base, much more rapidly. That would have aligned better with the "fast follower" strategy mentioned in previous posts.